Anglo lowers its 2024 diamond output guidance

Anglo American has lowered its diamond production guidance for 2024 in response to the higher-than-average levels of inventory in the market and the expected gradual recovery in rough diamonds through the rest of the year.

Diamond production is now expected at 26-29 million carats from a previous guidance of 29-32 million carats, Anglo said in a production update for the first quarter on Tuesday.

Unit cost guidance for 2024 is revised to about $90/carat from $80/carat previously, reflecting the lower production.

Rough diamond production decreased by 23% to 6.9-million carats in the quarter ended March.

In Botswana, production decreased by 28% to 5-million carats, driven by intentional lower production at Jwaneng and a short-term change in plant feed mix at Orapa to process existing surface stockpiles.

Production in Namibia was broadly unchanged at 0.6-million carats. In SA, production decreased by 19% to 0.6-million carats, due to the continued depletion of lower grade surface stockpiles before the planned ramp-up of underground operations at Venetia over the next few years.

Production in Canada decreased by 4% to 0.6-million carats, due to planned treatment of lower grade ore.

The group said demand for rough diamonds began to recover during the first quarter as demand for diamond jewellery in the US over the year-end holiday season improved.

“The flexibility for rough diamond allocations offered by De Beers in 2023, combined with the voluntary import moratorium on rough diamonds into India in Q4 2023, has helped improve the industry's balance between wholesale supply and demand,” it said.

However, ongoing uncertainty around economic growth prospects has led to a continued cautious purchasing approach by sightholders and the recovery in rough diamond demand is expected to be gradual through the rest of the year.

Rough diamond sales in the quarter totalled 4.9-million carats from two sights, compared with 9.7-million carats from three sights in the first quarter of 2023, and 2.8 million carats from two sights in the fourth quarter of 2023.

“We were pleased with the performance in the first quarter, with copper production increasing by 11% as Quellaveco achieved its highest plant throughput rate, while Collahuasi and El Soldado in Chile benefited from higher grades,” said CEO Duncan Wanblad.

Steelmaking coal production also increased by 7%, due to the performance at the Aquila longwall and Capcoal open cut operations.

De Beers implemented changes to lower its diamond production for the year by about 3-million carats which, combined with lower production from Anglo’s PGMs operations, resulted in flat production overall for the group compared to the same period of last year, Wanblad said.

Iron ore production was flat, with a strong performance from Minas-Rio, up 4%, offset by a planned decrease at Kumba to align with third-party logistics constraints, he said.

Production from the group’s PGM operations was 7% lower, reflecting expected lower volumes from Kroondal, which is reported as third-party purchase of concentrate from November 2023, and lower production at Amandelbult.

Nickel production was broadly unchanged.

“With copper now representing 30% of our total production and having the benefit of several well-sequenced and value-accretive copper growth options within our portfolio over the medium-term, we are also setting up the business to deliver and grow into the major demand themes,” said Wanblad.

Anglo maintained its 2024 guidance for copper, nickel, iron-ore, PGMs and steelmaking coal.

MackenzieJ@arena.africa